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». A recent study found that in the long run (defined as more than one year), the price elasticity of demand for gasoline is -0.58. If Massachusetts were to double its gasoline tax, its revenue from the tax would more than double. rise but not double. fall by 58 percent. fall by 100 percent.

». A recent study found that in the long run (defined as more than one year), the price elasticity of demand for gasoline is -0.58. If Massachusetts were to double its gasoline tax, its revenue from the tax would more than double. rise but not double. fall by 58 percent. fall by 100 percent.

Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Design Of The Tax System
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b. A recent study found that in the long run (defined as more than one year), the price elasticity of demand for gasoline is -0.58. If Massachusetts were to double its gasoline tax, its revenue from the tax would more than double. rise but not double. fall by 58 percent. fall by 100 percent.
Transcribed Image Text:b. A recent study found that in the long run (defined as more than one year), the price elasticity of demand for gasoline is -0.58. If Massachusetts were to double its gasoline tax, its revenue from the tax would more than double. rise but not double. fall by 58 percent. fall by 100 percent.
Each state imposes its own excise tax on gasoline. Suppose, for example, that the state of Massachusetts imposes a state gasoline tax of $0.26 per gallon. Suppose further that an average of 1,022,000 gallons of gasoline per day were sold in Massachusetts in 2010. a. Massachusetts' total revenue from the gasoline tax in 2010 was approximately $111 million $86 million $97 million $232 million
Transcribed Image Text:Each state imposes its own excise tax on gasoline. Suppose, for example, that the state of Massachusetts imposes a state gasoline tax of $0.26 per gallon. Suppose further that an average of 1,022,000 gallons of gasoline per day were sold in Massachusetts in 2010. a. Massachusetts' total revenue from the gasoline tax in 2010 was approximately $111 million $86 million $97 million $232 million
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